Turkiye announced a significant reduction in taxes on basic food supplies Saturday to counter soaring inflation while also unveiling a new credit guarantee fund package and a new model to bring “under-the-mattress” gold into the economy.
President Recep Tayyip Erdoğan said the value-added tax (VAT) would be lowered to 1% from 8% on dairy products, fruit, vegetables and other basic food items. His decision, published in the Official Gazette, is to go into effect on Monday.
“As part of simplifying the VAT system, we are reducing VAT from 8% on basic food products to 1%. We already applied it for flour and bread,” Erdoğan said via videoconference during a Treasury and Finance Ministry press conference on new economic support packages.
In addition to the tax discount, Erdoğan said the government “expects” companies to lower their prices by 7% from Monday to reflect the change. He said these foods play a significant part in inflation.
The government will also create a task force to inspect prices and a mobile app to help citizens find the cheapest goods, Treasury and Finance Minister Nureddin Nebati said at the event.
Official data for January showed consumer prices rose by 48.69% annually, a 20-year high. Food and non-alcoholic beverages inflation topped 55%. The government has pledged to act and vowed to safeguard households against soaring prices.